Audit, Compliance and Risk Blog

The Clean Air Act (CAA) directs the Environmental Protection Agency (EPA) to define “hazardous air pollutants (HAPs)” that may pose acute health hazards, and to impose regulations to reduce those hazards. Controls include permits for “major sources” of HAPs based on “Maximum Achievable Control Technologies (MACT),” and lesser controls for non-major “area sources.” Since 1995, EPA policy has been that every emission source that met major source criteria at the time a MACT became effective is “once in, always in” and cannot requalify as a less-regulated area source even if it accepts legally binding controls that reduce its “potential to emit.” On January 25, 2018 EPA reversed that decades-old policy.

The rest of this note discusses CAA requirements for HAP sources, and the implications of this change in policy.

How are Major and Area Sources Defined and Regulated?

CAA addresses sources of HAPs, and directs EPA to list emissions of particular HAPs by source categories that become subject to National Emission Standards for Hazardous Air Pollutants (NESHAPs). Since the 1990 CAA Amendments, most NESHAPs are based on MACT standards defined by EPA. Major sources require extensive permits, while area sources typically do not.

CAA defines a major source of HAPs as follows:

“‘major source’ means any stationary source or group of stationary sources located within a contiguous area and under common control that emits or has the potential to emit considering controls, in the aggregate, 10 tons per year [tpy] or more of any hazardous air pollutant or 25 [tpy] or more of any combination of hazardous air pollutants. “

In contrast, area source means any stationary source of HAPs that is not a major source. Readers should note that this determination may not be as obvious as it seems. For example, EPA may:

Aggregate sources within a single facility to reach the “major source” threshold.

Establish a lesser quantity (or for radionuclides different criteria), for a major source than that specified in the quoted text above, based on the potency, persistence, potential for bioaccumulation, or other characteristics of the pollutant, or other relevant factors.

Consider a source’s potential to emit, not just its present emissions – therefore, if a source operates for limited hours per year, but would exceed the major source threshold if it operated full time, EPA (or state regulators) may consider it a “major” source and require a permit. Conversely, a source that accepts a binding limit on its potential to emit – limiting hours of operation, for example – might be treated as less than major.

This last possibility plays into the policy change that EPA has just announced.

How is EPA Changing its Policy for Major Sources?

Beginning in 1995 (with a policy memo from then-Director Seitz of EPA’s Office of Air Quality Planning and Standards), EPA has allowed sources to negotiate binding limits on their potential to emit while MACT rules have been pending, so that on the date the MACT rule takes effect the source is not major. However, EPA has not allowed these changes after a MACT rule takes effect, continuing to regulate the source as major regardless of such operational changes or limits. This “once in, always in” policy means there’s been no way for a source to negotiate its way out of major source status.

Now, in January 2018 EPA has ended the “once in, always in” policy, and will allow a major source to negotiated binding limits on its potential to emit at any time, in order to cease to be regulated as a major source. EPA explains that this flexibility is appropriate for sources, and not restricted by the agency’s reading of CAA requirements.

Self-Assessment Checklist

Do any of the organization’s activities emit regulated hazardous air pollutants in quantities the may exceed CAA thresholds for a “major source?”

If so, has the organization evaluated whether to negotiate binding limitations on the activity’s “potential to emit” in order to qualify as an “area source” subject to reduced regulation?

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).